President Obama:
The America I know is generous and compassionate; a land of opportunity and optimism. We take responsibility for ourselves and each other; for the country we want and the future we share. We are the nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the GI bill and saved millions of seniors from poverty with Social Security and Medicare. We have led the world in scientific research and technological breakthroughs that have transformed millions of lives.
This is who we are. This is the America I know. We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t.
The New York Times editorial in response to the President's speech on fiscal policy is, in my view, one of the best appreciations of the stand President Obama took - as well as a realistic assessment of the limitations and the political problem we face moving forward:
On Wednesday (President Obama) used his budget speech to clearly distance himself from Republican plans to heap tax benefits on the rich while casting adrift the nation’s poor, elderly and unemployed. Instead of adapting the themes of the right to his own uses, he set out a very different vision of an America that keeps its promises to the weak and asks for sacrifice from the strong.
The deficit-reduction plan he unveiled did not always live up to that vision and should have been less fixated on spending cuts at the expense of tax increases. It may give up too much as an opening position. But at least it was a reasonable basis for a conversation and is far better than its most prominent competitors. That is because it is grounded in themes of generosity and responsibility that, until recently, had been shared by leaders of both parties.
Because everyone deserves “some basic measure of security and dignity,” he said, the nation contributes to programs like Medicare, Medicaid and unemployment insurance. He said that “we would not be a great country without those commitments.”
But House Republicans and many of their party’s presidential candidates are trying to terminate that promise, he said, leaving seniors on their own and abandoning 50 million uninsured Americans. They are saying no to rebuilding bridges, sending students to college, to investing in research while giving the rich $1 trillion in tax cuts.
“That’s not right, and it’s not going to happen as long as I’m president,” he said.
Perhaps it was inevitable that Mr. Obama would begin to restate his most appealing principles as he embarks on his re-election campaign, which opened with this speech. But the timing could not have been better. It came just days after he seemed to swallow the Republican Party’s insincere talk of deficit reduction by praising a six-month budget deal that cuts too deeply, and a week after Republicans released their proposal to cut taxes and erase decades of social progress by rewriting entitlement programs.
Mr. Obama said he would “refuse to renew” the Bush tax cuts for the rich when they expire at the end of 2012. That alone would save $700 billion over 10 years, and he proposed another $1 trillion in savings by limiting itemized deductions for the wealthiest 2 percent and by ending various unspecified loopholes.
Still, his plan relies on about two parts spending cuts to one part tax increases. It should have been closer to 50-50, broadening the sacrifice. That could have been achieved by reminding those in the middle class that their income taxes remain low and will need to go up, and also through new revenue sources like energy taxes, a financial-transactions tax or a value-added tax.
Along with $770 billion in cuts to nonsecurity domestic spending over 12 years — more than is prudent — he also calls for $360 billion in savings from mandatory programs like agricultural subsidies and pension insurance. To remain true to the ideals he espoused in his speech, cuts to other programs in this category like food stamps and subsidies for the working poor should be off the table.
He said he wouldn’t follow Representative Paul Ryan’s plan to make Medicare a voucher program “that leaves seniors at the mercy of the insurance industry.” Instead, he would wring savings in the plan by using governmental tools to hold down annual increases in spending.
His target for those increases was surprisingly low, much less than the current rate of growth, and it is not clear that that goal can be met without harming providers or beneficiaries. He would try to do so by giving greater powers to a special board to promote and enforce changes in health care delivery. He also promised real savings on prescription drug costs in Medicare and refused to accept Mr. Ryan’s notion of shrinking Medicaid into block grants.
Negotiations with an implacable opposition are about to get much tougher, but it was a relief to see Mr. Obama standing up for the values that got him to the table.
The most important thing that signaled that he hasn't just sold the base down the river was when he finally said out loud what everyone from Paul Ryan to Barny Frank knows: that tax increases will be necessary. He is at least as much of a triangulator as Clinton, but time and again, when he stands next to the opposition, he is the only adult in the room.
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